Management MGT 3303 Chapter Notes - Chapter 1: Accounts Receivable, The Assets, Bank Statement
Financial management deals with two activities: raising money and managing a company"s finances in a way that achieves the highest rate of return. Most entrepreneurial firms whether they have been in business for several years or they are start-ups have four main financial objectives: profitability, liquidity, efficiency, and stability. Profitability is the ability to earn a profit. Many start-ups are not profitable during their first one to three years, while they are training employees and building their brands, but a firm must become profitable to remain viable and provide a return to its owners. Liquidity is a company"s ability to meet its short-term financial obligations. s. Even if a firm is profitable, it is often a challenge to keep enough money in the bank to meet its routine obligations in a timely manner. To do so, a firm must keep a close watch on accounts receivable and inventories. A company"s accounts receivable is money owed to it by its customers.